‘Centralization issues’ the biggest reasons of DeFi attacks in 2021: CertiK report
A recent report from CertiK, a blockchain security firm, has shed light on the DeFi space, doubting that ‘decentralized finance’ may not be really be “decentralized” enough owing to increasing exploitation by attackers at centralized weak points draining users of billions of dollars, especially in the year 2021.
CertiK has prepared a new report concerning the state of DeFi security in 2021, with its researchers concluding that “centralization issues” counted as “the most common attack vector” within the DeFi space. The blockchain security firm has cited 44 DeFi hacks amounting to $1.3 billion in lost funds in the year 2021. This is an increase more than $500 million, in comparison with 2021.
The report has also added that centralization is “antithetical to the ethos of DeFi”, in addition to it possessing major security risks. Single points of failure that could have been exploited by dedicated hackers and malicious insiders look alike.
Research done by ImmuneFi has also revealed that the value lost due to DeFi hacks and related scams have exceeded $10 billion in the last one year, hence revealing major discrepancies in the classification and tracking of exploits. However, most of the research on the matter appears to be agreeing that security exploits targeting DeFi projects have been on a steep rise.
Although DeFi current exploits have undermined the legitimacy of cryptocurrency markets in view of traditional investors and legacy financial systems, CertiK’s report has offered a silver lining on the fact that 2021’s losses represent only 0.05 per cent of crypto’s total market capitalization, which is down 17 per cent from the previous year.
The cryptocurrency market has just peaked north of $3 trillion in November 2021 after it had started the year below $800 billion, as per data from CoinGecko. DeFi has been a major growth catalyst for cryptocurrencies, with the sector’s total value locked exceeding from less than $20 billion at the start of the year 2021, peaking to a record high of nearly $260 billion in December.
Total value locked, also called TVL, refers to assets that are being staked on DeFi protocols.
CertiK has cited the growing popularity of Binance Smart Chain (BSC) being one of the biggest reasons for DeFi’s success. Between January and December 2021, BSC’s TVL had grown from $62 million to $21 billion, which is an increase of 31,000 per cent.
Demand for CertiK’s blockchain security services are appearing to be on the rise as more projects are looking towards avoiding investors falling victim to scams and exploits. The company has audited a total of 1,737 projects across 2021. CertiK has been approaching unicorn status after it secured $80 million in Series B2 investments that had concluded in late November 2021.
